The Hidden Divide: Focus on Growth Verticals Drives Satisfaction Gap Between Global Wholesale Customer Segments

Every year, ATLANTIC-ACM surveys hundreds of global wholesale buyers. We ask them to rate their wholesale providers in various customer-experience touch points as well as product quality and price competitiveness. A quick glance at this year’s ratings for overall operations looks like business as usual. Customer satisfaction with overall wholesale service-provider operations has changed by less than 1 percent since 2010. This trend continued over the past year, with net overall satisfaction remaining flat from 2013 to 2014. But underneath that top line we find increasing satisfaction among large customers and stagnant (or nominally decreasing) satisfaction among their smaller counterparts.

Digging into specifics, satisfaction with overall operations has declined by 0.7 percent from 2010 to 2014 among all global wholesale customers. During that time, ratings from customers spending more than $25 million annually on wholesale connectivity increased by 4.1 percent, while it decreased by 2.3 percent among customers spending less than $25 million. The swing is more pronounced this year, jumping 5 percent among large customers (and offsetting a brief drop in 2013) while smaller customer satisfaction declined nominally by 0.5 percent this year.

The same trend applies to customer responses by numbers of employees. Customers with fewer than 10,000 employees rated their global wholesale service providers flat year-over-year, while those with more than 10,000 employees rated them 3.3 percent higher.

In reality, this trend speaks to carrier strategy more than it does preference by customer size. Simply put, global wholesale providers are targeting large and high-growth verticals. For example, the wireline vertical’s year-over-year satisfaction decreased 1.1 percent, while satisfaction improved among the wireless and emerging markets verticals by 5.3 percent and 2.1 percent, respectively (the emerging markets vertical consists of the cable/content/ISP verticals, resellers/systems integrators and data center/hosting/cloud providers). The wireless and emerging-markets verticals are low-hanging fruit in terms of future revenue growth potential.

The same dynamic is evident when we turn the tables and review customer satisfaction by wholesale service-provider size. My firm separates these groups into two categories – large service providers and midsize-and-under service providers. (These divisions are reflected in our ATLANTIC-ACM Awards for Global Wholesale Service Provider Excellence, delivered January 22.) Overall, global wholesale customers rated large providers 2.7 percent lower in overall operations than midsize-and-under providers – a trend that has surfaced frequently in our nearly 20 years of benchmarking research. But as soon we applied the same filter of customer spend to this trend, we found that smaller-spend customers (less than $25 million) were more critical of large service providers than their larger spending counterparts. Less variation exists in ratings of midsize-and-under service providers, reflecting that large service providers are focused more on larger customers, potentially missing opportunities with (relatively) smaller-spend customers.

The bottom line is today’s telecom wholesalers have become more sophisticated in their pursuits of growth channels, and those efforts are driving stronger satisfaction in customers with stronger growth prospects. In next month’s column, we’ll review global wholesale carrier performance in individual operations.

This analysis orginally appeared at the ATLANTIC-ACM blog at B/OSS Magazine.

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